Answer:
(Q4) Receivables turnover ratio= 1.135
(Q1) Receivables turnover ratio= 1.153
Average collection period for Q1=31 7 days
Average collection period for Q4 = 317 days
Explanation:
The Receivables turnover ratio gives us the efficiency of collections and the Average collection period tells us the number of days in which the receivable is collected.
Three Months Ended (Q1) (Q4) (Q3)
9/30/2017 6/30/2017 3/31/2017
Balance sheets:
Accounts receivable, net $ 21,361 $ 19,880 $ 12,970
Income statements:
Sales revenue $ 24,620 $ 23,400 $ 22,260
Receivables turnover ratio= Net Sales / Average Accounts Receivable
Average Accounts Receivable= Net Receivables for one Quarter + Net Receivables for other Quarter/2
(Q3) Receivables turnover ratio= $ 22,260/ $ 12,970 + $ 19,880/2
(Q3) Receivables turnover ratio= $ 22,260/ 16425
(Q3) Receivables turnover ratio= 1.355
This indicates that average accounts receivable balance is converted into cash 1.355 times during the quarter.
(Q4) Receivables turnover ratio= $ 23,400 /$ 19,880 + $ 21,361 /2
(Q4) Receivables turnover ratio= $ 23,400 /20620.5
(Q4) Receivables turnover ratio= 1.135
This indicates that average accounts receivable balance is converted into cash 1. 135 times during the quarter.
(Q1) Receivables turnover ratio= $ 24,620/$ 21,361 ( assuming net is average)
(Q1) Receivables turnover ratio= 1.153
This indicates that net accounts receivable balance is converted into cash
1. 153 times during the quarter.
Average collection period for Q1 = 365/ Receivables turnover ratio
Average collection period for Q1= 365/1.153= 316.6= 317 days
Average collection period for Q1=31 7 days
Average collection period for Q4 = 365/Receivables turnover ratio
Average collection period for Q4 = 365/1.15= 317.4= 317 days
